TaxTMI 
TaxTMI 
2017 (5) TMI 678
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....even in the case of the appellant even though no incriminating material pertaining to the appellant was either found or seized in the premises searched. 2. Without prejudice to the legal ground above: a) The Ld. CIT(A) erred in confirming the disallowance of the claim of deduction of Rs. 6,84,62,992i'- u/s 80IB(10) of the Income Tax Act,1961 on the ground that the project approval as required u/s 80IB(10) of the Act is never obtained in the name of the appellant. In doing so the learned CIT(A) did not properly appreciate the contention of appellant that the appellant had developed an approved project and the approval has been obtained by Shri Harshad Doshi member of the appellant AOP as evidenced by the letter issued by Mira Bhayander Mahanagarpalika under Right to Information Act(RTI Act). The order of the learned CIT(A) on this point is contrary to the ratio of the Judgments of the following cases: i) Commissioner of Income Tax Vs Vandana Properties (76 DTR 363) (In The Bombay High Court). ii)CommissioD;er of Income Tax Vs Radhe Developers (341 ITR 403) (In The Gujarat High Court). b) On the facts and in the circumstances of the ca....
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....Doshi for construction of any building in sector no. 1 of shantinagar project prior to the one given vide Commencement Certificate No.MB/MNPINR/2600105-06 dated 27.01.2006. 3.On the facts and in the circumstances of the cases, the CIT(A) erred in confirming the contention of Assessing Officer to levying interest uls234B and 234C." 3. In the ground No 1 of appeal, the assessee has raised legal ground that assessment order was famed u/s 153A of the Income Tax Act, 1961 when there was no proper and valid search in as much as no specific panchanama was drawn in the name of the assessee and no incriminating documents were found and seized against the assessee during the alleged search from the premises search which belonged to persons other than the assessee 3.1 The ld. CIT(A) erred in holding that the assessee has not commenced a legally approved project in terms of Income Tax Act, 1961; 3.2 The ld. CIT(A) erred in confirming the action of the AO on the ground that the commencement certificate is not in the name of the assessee which was issued in the name of M/s Shanti Star Builders and others; 3.3 The ld.CIT(A) erred in confirming the finding of the AO that the p....
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....lant, wherein the name of the appellant was found mentioned. Based on the said search warrant, the AO submitted that search has even been conducted in the case of the appellant as well. The FAA on the basis of search warrant and panchanama for the said premises held that the search has been executed even in the case of the appellant. The ld. CIT(A) dismissed the appeal of the assessee by observing as under : "Decision: 9.0 I have carefully examined the facts of the case, the stand taken by the A.O in the assessment order and in the remand report, the grounds of appeal, the written submissions and further rejoinder filed by the appellant during the hearing proceedings. 9.1 The appellant's contention that there was no search action u/s.132 of the Act in the case of the appellant is not true. The perusal of the warrant of authorization issued shows the name of appellant along with the names of some other persons as a joint warrant of authorization. The following names are included in the warrant of authorization: (i) Shri Harshad Poonamchand Doshi (ii) M/s. Unique Shanti Developers (iii) M/s. Harsh Unique Developers (i....
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....ssment could not have been made in the capacity of an individual. We, therefore, set aside both the orders passed by the Commissioner of Income Tax (Appeals) anq th.e Tribunal and remarid the matter to the Commissioner of Income Tax Appeals to decide the appeals on merits. The substantial question of law on which the appeals have been admitted is decided in favour of the Revenue by holding that where the warrant of authorisation has been issued jointly the assessment can be made individually. In view of the retrospective effect having been given to Section 292CC of the Act, the law propounded in the cases of Smt. Vandana Verma and Smt. Madhu Chawla loses its significance." 9.4 In view of the above decision as well as the retrospective amendment made to section 292CC of the Act, the warrant of authorization issued jointly including the name of the appellant is valid and a separate assessment made in the case of the appellant on the basis of a joint warrant of authorization is also valid. 9.5 The appellant's arguments that there was no search action in the premises of the appellant and therefore there is no search which effectively took place in the cas....
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.... the assessee because no specific panchanama was drawn and no incriminating material relating to the assessee was found and seized from the premises searched. The assessee has also challenged the order of the ld.CIT(A) upholding the order of the AO on the ground that panchanama drawn in the name of Shri Harshad P Doshi which was the proof of search even in the case of assessee even when no incriminating material was either found or seized in the premises searched. The ld. AR vehemently submitted before us that the assessment order in question was void ab-initio and bad in law as the assessment has been framed under section 153A of the Act even though no search was actually conducted in the case of the appellant. The ld. Counsel submitted that the prescribed conditions as laid down for assumption of jurisdiction u/s 153A of the Act were not satisfied and the therefore the assessment framed under section 143(3) r.w.s. 153A of the Act was without valid jurisdiction and should be quashed. The ld. AR while referring to the provisions of section 153A of the Act and section 132(1) of the Act submitted before the Bench that there were specific circumstances as mentioned in clauses (a) to (....
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.... by warrant of search authorizing search but the AO has to prove that the search has actually been carried out in respect of the said persons through Panchanama in order to justify the notice issued for assessment under search proceedings. The ld. AR argued that search at the residence of member of assessee AOP would certainly not fulfill the prescribed conditions to authorize the search assessment under 153A of the Act in the case of assessee AOP and it was absolutely clear that no panchanama has been drawn which means that no search has taken place to provide legal basis for search assessment under section 153A of the Act. It would be contrary to the provisions of law to assume that once the warrant has been signed there is initiation of search for setting in motion the proceedings u/s 153A of the Act. The ld. AR further argued that the FAA was grossly wrong in holding that where the warrant issued in the name of the assessee and panchanama was drawn with the name of the assessee being mentioned and stated in the said panchanama there would be execution of search justifying the action u/s 153A of the Act. The ld. AR further contended that the FAA has failed to appreciate the issu....
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....search had taken place and no material incriminating or otherwise was found or seized from the premises subjected to the search. The ld. AR submitted that when the name of the assessee has not mentioned in the panchanama and no material was seized with regard to the assessee it was not omission on the part of the search party to mention its name but a clear proof of the facts that no search had taken place. The ld. AR also submitted that provisions of section 153A of the Act inserted by the Finance Act in the year 2003 and in the explanatory note issued by the departmental circular No.7 of 2003 dated 5.9.2003 the scope of provisions in para 65.4 were explained which states that the AO shall issue notice to a person on whom a search was conducted to furnish return of income in respect of six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted under section 132 of the Act or requisition was made under section 132A of the Act. Subsequently, the amendment was brought by Finance Act, 2008 and the circular No.1/2009 dated 27.3.2009 again reiterated that the provisions of section 153 of the Act came into operation wher....
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....see were not searched and no incriminating documents were found and seized from the premises searched which belonged to members of AOP and not AOP assessee. There was no panchanama drawn in the name of the assessee AOP. The technical issued raised by the AR for adjudication before us is as to whether the search can be said to have been taken place, conducted and concluded when no actual search was taken place in the premises of the assessee and no panchanama was executed. The panchanama is most important and vital documents in the search as period of limitation is reckoned from the last panchanama drawn and now issue is whether the assessments framed u/s 153A of the Act was valid or not. In view of the aforesaid defects and deficiencies in the search proceedings, the provisions of section 153A, 153B and 132(1) are relevant and needs to be understood in order to reach a correct conclusion. The provisions of section 153A, 153B and 132(1) are reproduced below : "153A. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of accoun....
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....sioner or Principal Commissioner or Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner in consequence of information in his possession, has reason to believe that- (a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub-section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub-section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice, or (b) any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act, or (c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such....
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....lating to assessee was found in the premises searched belonging to the members of the assessee AOP. Finally, the search was concluded in the name of the members of AOP where panchanama was drawn duly but no panchanama was drawn in the name of the assessee -AOP and therefore, the limbs and contents to be satisfied for assessment of jurisdiction u/s 153A were not satisfied. In the case of M/s Harsh Deep Construction (supra), it has been held as under : "Held 10. As noticed earlier, in the instant case, though the warrant of authorisation was prepared in the name of the assessee, yet there was no commencement or initiation of search in pursuance of the said warrant. When there is no commencement of search at all, the question of invoking the provisions of sec. 153A shall not arise. We notice that the Ld CIT(A) has expressed the view that the search need not take place at the business premises of the assessee itself, but it can be conducted in any other place also. There should not be any dispute with the observations so made by Ld CIT(A). But the important point is that the search in any other place should have taken place in pursuance of warrant of authorisation ....
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....al basis for search and consequent assessment under section 153A of the Act and it would be totally illegal to assume that once the warrant has been signed there is initiation of proceedings u/s 153A of the Act. We, therefore are not in agreement with the conclusion drawn by the ld. CIT(A) that once the warrant issued in the name of the assessee and panchanama was drawn though the assessee's name was not there in the panchnama, there was a proper execution of search justifying the action u/s 153A of the Act. In this case, we find that premises of the assessee are at Shraddha Residncy, Chandavarkar road, Borivali (W), Mumbai-400092. It is very surprising that according to the AO and FAA, the search was conducted on the assessee but the business premises of the assessee were spared from proceedings u/s 132(1) of the Act and even no incriminating material was found and seized from the premises of members of AOP assessee. We, therefore, are of the view that in view of the fact that there was no search conducted in the premises of the assessee and no punchnama was drawn up, the assessment proceedings u/s 153A of the Act were without valid jurisdiction. The case of the assessee also find....
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....finding of the Tribunal was also dismissed by the Hon'ble Bombay High Court and the Special Leave Petition filed before the Hon'ble Apex Court stood dismissed which confirms the fact that the search has to be conducted in the business premises occupied by the assessee in order to initiate assessment proceedings u/s 153A of the Act. In the case of Dr. Mansukh Kanjibhai Shah V/s CIT (supra), The Tribunal held as under : "The warrant of authorization being issued in the name of the trust and the assessee, being the Managing Trustee of the Trust, but no search operation was conducted in premises of assessee and in the warrant of authorization The address of the place to be searched is not the address of the assessee-individual, no panchanama is also drawn in pursuance of the warrant of authorization in the case of the assessee, no documents were seized or impounded as such from the assessee, no documents were sized or impounded as such during he course of search from the assessee, he AO was not justified in initiating proceedings or assuming valid jurisdiction under section 153A against the assessee" In the case of Sarvamangalam Builders and Developers Pvt ltd (supra), i....
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....pear in the panchanama and no material is seized with respect to the assessee from business premises of membership of AOP searched it could not be taken as omission on the part of the search party of mentioning the name but it is clear proof and conclusive proof that no search was at all conducted. We are therefore of the considered view that no search has been conducted in the case of the assessee in view of the discussion hereinabove and accordingly, we are of the considered view that the order of the ld.CIT(A) deserved to be set aside and accordingly, we hold that the proceedings under section 153A of the Act is without any valid jurisdiction so is the consequent assessment order also passed u/s 143(3) r.w.s.153(A) of the Act and hence quashed. The ground of appeal is allowed. 11. In the second ground which is without prejudice to ground no 1, the assessee has challenged the confirmation of disallowance of claim of deduction of Rs. 6,84,62,992/- under section 80IB(10) of the Income Tax Act on the ground that necessary approvals as required by the assessee u/s 80IB(10) of the Act were never obtained from the designated authorities by the assessee. 12. The brief facts and ch....
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.... reasons:- a. The assessee did not receive any legal sanction from the local authority and the project was not started legally. It has been stated by the AO that firstly the commencement certificate dated 27.01.06 was in the name of "Shanti Star Builders and Others" and secondly the commencement certificate was applied on 04.01.06 and on the date of its issue the appellant AOP was not in existence. b. The provisions of section 80IB(10) of the Act do not envisage commencement of project by one entity and completion by another entity for purposes of eligibility. c. Shree Harshad P. Doshi member of AOP acquired the right of development through the power of attorney and he was not exclusive owner of land on which the project was developed. The claim of approval on the basis of certificate from local authority cannot be accepted. d. In response to inquiry letter issued, M/s Shanti Star Developers had accepted that certain development right were transferred in sector no.1 vide agreement dated 12.09.2000 to Mr. Harshad Doshi however as per the AO there was however no transfer of ownership of land. e. The completion certificate dated 01.10.2007 ....
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....8 were not available for construction of projects for certain reasons. In its place the builder had made available the plot bearing survey no 131(0Id survey no 745) and 100 (old survey no 746) admeasuring 2,91,655 sq. feet for construction of building. This plot was located in sector 1. The builder thereafter executed a Power of Attorney in favour of Mr. Harshad Doshi to enable him to obtain various permissions from government department for purposes of construction of residential project. Another Power of Attorney was executed in favour of Mr. Harshad Doshi and his wife Madhuben Doshi by the landlords of the plot of land of which M/s Shanti Star Builder were the developers. Mr. Harshad Doshi had acquired development rights from M/s Shanti Star Builders. In April 2006, a Joint Venture was created comprising of Mr. Harshad Doshi, Mr. Chandrakant Doshi & Mr. Hemal Doshi to execute the project as Mr. Harshad Doshi who had acquired the development rights was handicapped and was not in a position to move about and attend the affairs of construction and co-ordination with various departments by himself. The assessee along with M/s Shanti Star Builders has applied for sanction of construc....
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....fore 31.03.2008 by a local authority; b). the construction of the project should commence after 01.10.1998; c). the construction should be completed before 31.03.2008 where the approval was received before 01.04.2004 and within 4 years from the end of the financial year in which the housing project is approved by the local authority on or after 01.04.2004 and before 31st Day of March, 2005; d). where the housing project is approved on or after 15t day of April, 2005 the project should be completed within 5 years from the end of the financial year in which the housing project is approved; e). the project should be on a plot of land having minimum area of 1 acre; f). the residential unit in the project has a maximum built area of 1000 square feet where the residential unit is situated in Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place; g). the built up area of the shops and other commercial establishment included in the housing project does not exceed the prescribed percentage or the prescribed limit of the built up area." The pro....